Logistics industry concern over consideration of tax on rail freight

Thursday 17 May 2018

This week's announcement of a government consultation on the use of red diesel (as rebated gas oil is known) in non-road vehicles is a significant concern for the freight sector, according to the Freight Transport Association (FTA), whose members move more than 90% of the UK’s rail freight nationwide. According to Christopher Snelling, FTA’s Head of UK policy, rail should be ruled out of the discussion from the start, because of the key role it plays in moving large quantities of goods and materials across the country.

“Every freight train takes about 60 HGVs off the country’s roads,” he says, “giving carbon, air pollution, road safety and congestion benefits. It also helps the economy by providing a productive, cost effective and high performing option for logistics operators needing to support key industries, including the construction, manufacturing and retail sectors."

"Dis-incentivising diesel in trains makes no sense as, until the Government electrifies the network, there is no alternative open to operators or users."

On average, a gallon of diesel will move a tonne of goods 246 miles by rail, but only 88 miles by road.

The logistics industry is working to increase the use of rail but, according to Snelling, fears about future tax increases on it will make this harder: "FTA doesn't believe that the Government would do something so contrary to their own desire to decarbonise the supply chain or support an efficient economy, as taxing rail services would be. But even the consideration of it this year will make it harder to persuade potential customers to explore rail as an option for their freight transportation requirements.

“FTA believes the Government should reassure business and the rail freight industry immediately that this review will not end with train services being made to pay the same high fuel taxes as road vehicles currently face - the highest fuel taxes in Europe.”

Efficient logistics is vital to keep Britain trading, directly having an impact on more than seven million people employed in the making, selling and moving of goods. With Brexit, new technology and other disruptive forces driving change in the way goods move across borders and through the supply chain, logistics has never been more important to UK PLC. A champion and challenger, FTA speaks to government with one voice on behalf of the whole sector, with members from the road, rail, sea and air industries, as well as the buyers of freight services such as retailers and manufacturers.